May 2017

05/29/2017

The purpose of a reliable financial forecast is to help you make better, faster business decisions.

Most entrepreneurs and business owners, and some private company investors, wait until they see profitability or cash flow problems in their historical financial statements before they finally conclude that they need to make changes in the business to improve results.

But most of those profitability and cash flow challenges can be seen in advance… far enough in advance for you to do something about them before they even happen.

Reliable – Unbiased, reality-based expectation of financial results that is designed for decision-making (not precision). Financial Forecast - A full set of forward-looking financial statements (P&L, balance sheet, and cash flow) that includes a 2-minute summary.

Unbiased is the Secret

One of the most important words in that definition is “unbiased”.

By unbiased I mean the forecast is what you expect financial results to be without regard to the plan, targets, budgets, quotas, or what your Board or investors want to hear.

That’s why asking your sales force to provide estimates of sales so you can forecast revenues doesn’t work. A sales person’s job depends on being optimistic and positive about the future and what they hope to sell in the coming months. They are biased, not unbiased (which is not a bad thing – it just has no place in the process of creating a reliable financial forecast).

That’s one of the big reasons I teach business owners, CFOs, and advisors that a reliable financial forecast should only take one person to create and maintain.

And that one person needs full license to “drop a turd in the punchbowl” if expected results in the forecast fall short of your financial plan or targets.

Your Early Warning System

That way you have a “heads up”, an early warning system, so you can make changes in the business NOW if expected results are not in line with what you are trying to accomplish.

There is no need to wait and see poor financial results in your historical financial statements before realizing that you need to make changes in the business.

The person running your financial forecasting process must have the guts and “permission” to provide an unbiased, reality-based view of expected financial results. Which means you can’t have a shoot the messenger mentality when forecasting or you will turn the forecast into an exercise in futility (and poor decision making).

A Quick Start Guide to Financial Forecasting: Discover the Secret to Driving Growth, Profitability, and Cash Flow Higher provides a straightforward, easy-to-understand guide to one of the most powerful financial tools in business: a reliable financial forecast. It will transform the financial future of your company and help you make better, faster, smarter business decisions. Order the book at Amazon.

05/22/2017

Charlie Rose did an amazing interview with Jeff Bezos, founder of Amazon.com, at the Economic Club in New York in October 2016.

I absolutely loved every minute of it. And I have watched it more than once (and will watch it more in the future). 😊

Charlie Rose started the interview by asking this question:

What is it that Amazon wants to be?

Jeff Bezos’ answer was super enlightening. This is the kind of education and insight that makes learning more and more about business fun and exciting.

Here is a summary of his response:

“Our number one conviction and idea and philosophy and principle… is customer obsession, as opposed to competitor obsession. And so we are always focused on the customer, working backwards from the customer's needs, developing new skills internally so that we can satisfy what we perceive to be future customer needs. We have a whole working backward process that starts with the customer needs and works backwards.

Willingness to think long-term. I think that is another common thread that runs through every single thing we do. We are very happy to invest in new initiatives that are very risky, for five to seven years, which most companies won't do that. Companies will invest for very long periods of time, and they should in those cases where the outcomes are more certain. It's the combination of the risk-taking and the long-term outlook that make Amazon, not unique, but special in a smaller crowd.

And then finally, taking real pride in operational excellence, so just doing things well, finding defects, and working backwards. That is all the incremental improvement that in business, most successful companies are very good at this one. If you are not good at finding defects, finding the root cause of the defects, fixing that root cause, you don't want to ever let defects flow downstream. That is a key part of doing a good job in any business in my opinion.”

Being Obsessed with Customer Experience

About 21 minutes into the interview, Jeff Bezos made a point that is important for us to think long and hard about as business owners and investors. He said:

“You don't do things for business reasons. You need to do things for the customer experience reasons. But you need to know how you are going to pay for that customer experience. You need to close the loop on the business side too.”

This statement goes back to his first point about being obsessed with the customer experience.

We would all be well served to spend more time being obsessed about the customer and the customer experience.

Not easy… but important to our ability to survive and thrive in business.

A Quick Start Guide to Financial Forecasting: Discover the Secret to Driving Growth, Profitability, and Cash Flow Higher provides a straightforward, easy-to-understand guide to one of the most powerful financial tools in business: a reliable financial forecast. It will transform the financial future of your company and help you make better, faster, smarter business decisions. Order the book at Amazon.

05/15/2017

I’m proud to be one of the speakers at the 16th Annual Live Future Ready Conference in Chicago, IL. The conference will be held from June 20 – 22, 2017. My session will be June 22, 2017.

In my session, I’ll show you how to create a reliable financial forecast and get it up and running quickly. It will be a fast-paced session that includes a fun example. I’ll teach the quick start financial forecasting principles… then put the principles to work with a real company.

Steve Player leads and organizes the conference each year. He is the founder and managing director of The Player Group. Steve has co-authored and edited five industry-leading cost and performance management books (and wrote the foreword for my new book). 😊

He is program director for the Beyond Budgeting Round Table in North America. Steve is a top ranked speaker and consultant helping clients implement leading edge practices and the co-author (with Steve Morlidge) of Future Ready: How to Master Business Forecasting.

Live Future Ready™ is a shared-learning member network focused on implementing advanced planning processes, improving management models to become more adaptable, and empowering their organizations to enable sustained, superior performance.

Live Future Ready™ members are also granted membership in the Beyond Budgeting Round Table North America (BBRTNA).

The conference will be held at the Summit Executive Centre 205 N Michigan Ave, 10th Floor Chicago, IL 60601, USA.

NOTE: My new book is NOW available at Amazon. (The book begins shipping on July 12, 2017 but you can pre-order before that date.)

A Quick Start Guide to Financial Forecasting: Discover the Secret to Driving Growth, Profitability, and Cash Flow Higher provides a straightforward, easy-to-understand guide to one of the most powerful financial tools in business: a reliable financial forecast. It will transform the financial future of your company and help you make better, faster, smarter business decisions. Order the book at Amazon.

A Quick Start Guide to Financial Forecasting: Discover the Secret to Driving Growth, Profitability, and Cash Flow Higher provides a straightforward, easy-to-understand guide to one of the most powerful financial tools in business: a reliable financial forecast. It will transform the financial future of your company and help you make better, faster, smarter business decisions. Order the book at Amazon.

It’s about setting financial goals and TARGETS, MONITORING forecast and actual financial results, and making ADJUSTMENTS in strategy and execution inside the company when results differ from the target or expectation.

Targets are the key financial and nonfinancial goals that drive from your vision and strategy.

I sincerely believe that if you are getting serious about taking control of the financial side of your business, the monthly financial rhythm will become your new best friend.

I’ve followed this approach my entire career as a CFO and financial officer in companies large and small.

Give it a try and let me know if it helps you drive growth, profitability, and cash flow higher this year.

NOTE: My new book is NOW available at Amazon. (The book begins shipping on July 12, 2017.)

A Quick Start Guide to Financial Forecasting: Discover the Secret to Driving Growth, Profitability, and Cash Flow Higher provides a straightforward, easy-to-understand guide to one of the most powerful financial tools in business: a reliable financial forecast. It will transform the financial future of your company and help you make better, faster, smarter business decisions. Order the book at Amazon.